Depending on your province and insurer, you may be able to get your coverage from an agent who works directly for an insurance company or through an insurance broker. Brokers and agents will assess your insurance needs and determine the coverage you need. Generally, agents work with one insurance company, while brokers can offer coverage from several companies to which they are contracted.

Basic Insurance

This is the minimum that your province or territory requires you to have. You can then add optional coverage, which can include collision, comprehensive, a rental car when your vehicle is being repaired after a crash, or higher payout coverage than the basic amounts. This last one is often a good idea because injury or death settlements can often skyrocket well past the regulated minimums. Naturally, each addition will increase your insurance premium.

Claim

When you notify your insurer of a crash or other incident, a claim is opened. Be sure to get the claim number, which you’ll need as you proceed through the steps of getting your car repaired, or health care requirements due to injury. There’s usually a time limit for informing your insurer of an incident, so check your policy to be sure you know how long you have.

CLEAR

Many insurers use the Canadian Loss Experience Automobile Rating (CLEAR) System to partly determine premiums based on a vehicle’s repair or replacement costs, safety systems, design, and ease of theft.

Collision Coverage

This covers repairs to your vehicle in a crash that you caused. Some drivers don’t add collision coverage if their vehicle is old and don’t feel the premium is worth the cost of the vehicle, but you should do your homework on the cost of repairs to see if this is the right option for you. Collision is usually required by your financial institution if you’re leasing or financing your vehicle.

Comprehensive Coverage

This covers vehicle repairs unrelated to a crash, such as fire, vandalism, theft, something falling on the car, or something hitting it, like a rock thrown up off the road that breaks the windshield. Some drivers decline this coverage if the car isn’t worth much.

Deductible

When you make a claim, this is the amount you have to pay before the insurance kicks in. If you have a $500 deductible on a $2,000 repair, then you pay $500 out of your pocket, and your insurance company covers the remaining $1,500. If the repair is less than your deductible, you have to pay the whole thing. A higher deductible will lower your insurance premiums, but don’t set it so high that you won’t be able to afford it if something happens.

Discounts

You may be eligible for discounts, depending on your insurer, for such things as using winter tires, taking an advanced driver training course, going a number of years without a claim, or if you’re a university student. You might also get a break if you have more than one vehicle insured, or also use that insurer for your home, rental, or life insurance. Be sure to ask for any discounts that apply.

Driving Record

This is a record of your driving history, and insurers will look at it to assess your risk. It includes how long you’ve had your license, a list of any tickets you’ve received over a specified amount of time, and if your license has ever been suspended.

GAP Insurance

A new car depreciates as soon as you drive it off the lot, and if it’s totalled in a crash, you may get less than you still owe on it. Check if your insurer offers Guaranteed Auto Protection (GAP) or depreciation coverage, which covers the difference.

High-Risk Insurance

Some drivers have such poor driving records that insurance companies won’t cover them. In this case, high-risk policies are available, provided in some provinces and territories by the Facility Association. Expect them to be expensive.

No-Fault Insurance

This is a confusing term, because someone’s always at fault in a collision, and if it’s you, you may be charged by the police and it could raise your insurance premiums in the future. No-fault coverage means you deal with your own insurance company for compensation no matter who caused the crash, rather than going after the other driver’s insurer. The benefit to you is that if you’re injured, you can access benefits immediately from your insurer, rather than waiting for someone to determine whose policy should pay.

Preferred Shops

Most insurance companies have a list of repair shops that they trust for the quality of work and accurate billing. Insurers may have the right to question or refuse a repair if a shop is not on their radar, so check first if you’re taking it to someone who isn’t listed.

Premium

The amount you have to pay for your coverage. Your payment schedule will depend on your insurer, and can range from monthly to annually.

Principal Driver

The person who primarily drives the car. Other family members may be named as occasional drivers on the policy. Listing someone who is not the primary driver as such is considered fraud and can carry stiff penalties.

Proof of Insurance

Your insurer will send you a card that includes your policy number and expiration. This must be with you at all times while you’re driving. If you’re stopped by the police and you don’t have it, you could be fined.

Risk Assessment

Insurers determine the cost of your policy by assessing how likely it will be that you make a claim. This can include such things as your driving record, years of driving experience, where you live, the type and value of your vehicle, how far you drive, who else will drive the vehicle, and how many claims you’ve made in the past. Depending on where you live, it might also include information like your age or gender.

Third Party Liability

This is coverage if you injure someone or damage property with your vehicle. Skid off the road and run into someone’s fence, for example, and the fence’s owner will be paid for the damage under this part of your policy.

Write-off

Also called a total-loss claim, a write-off occurs when the cost of repairing a vehicle is more than it’s worth. You’ll be reimbursed the value of the car at the time of the crash (not what it would have cost to fix it), less any deductible you have on your policy.

No one likes paying for car insurance, but it’s as essential for driving as gasoline and tires. It’s a requirement to cover any losses to other vehicles, people or property should you be involved in a crash, but it’s also a way to protect yourself and your own vehicle.

There are some variances in insurance across Canadian provinces and territories, but all of them have minimum requirements, as well as available policy add-ons. How much you’ll pay depends on such factors as your driving record, your vehicle’s value, your deductible, and whether you fall into any high-risk categories due to your age or driving experience.

In British Columbia, Saskatchewan, and Manitoba, the mandatory basic coverage is provided by government-run insurance companies, and drivers can buy additional coverage from private or government companies. In Quebec, auto insurance is provided by both a government insurer and private agencies. Personal injury is covered under Quebec’s no-fault system and provided by the government. Insurance to cover property damage to the vehicle is provided by private insurance companies. In all other provinces and territories, insurance is sold by private companies.

You also have to carry third-party liability insurance, which covers anyone you hit, and you must be insured for a minimum of $200,000 of coverage everywhere except Quebec, where it is $50,000. However, it is generally recommended to carry more than the minimum level of coverage as it would not be sufficient in many claims. As well, drivers everywhere except in Newfoundland and Labrador must have coverage for their own medical expenses and loss of income due to vehicle-related injuries.

It may be tempting to drive without coverage if you’re quoted very high premiums, but that is a bad idea. Not only do you risk a heavy fine if you’re caught, but should you crash, you could be on the hook for astronomical amounts of damage or injury payouts. It’s just not worth it.

Insurance has a language all its own, and you may not be familiar with all of the terms. We’ve assembled a glossary, but if there’s anything you don’t understand about your policy, always ask your insurer or broker to explain it in plain language. It’s essential to be “in the know.”

Click the next slide above to scroll through our gallery of key terms.